U.S. automakers cautious on health reform calls

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A decade after U.S. automakers supported Hillary Clinton’s failed plan to transform the U.S. health-care system, the car companies are taking a more cautious approach even as costs climb at threatening rates.

The Big Three, who together paid about $10 billion for health care for their workers last year, have called on Washington to help rein in rising costs while trying to avoid rousing the type of opposition from interest groups that killed the Clinton plan. 

Noting that Ford Motor Co. spent $3.2 billion on health care last year, Ford Chief Operating Officer Jim Padilla said; “If it keeps going up at 14 percent a year, it could be over $6 billion in a matter of five or six years. That’s unsustainable.”

Padilla, speaking at the Reuters Autos and Manufacturing Summit in Detroit on Wednesday, said Washington needs to put health care at the top of its agenda. But when asked which presidential candidate had the best solution, he said that he hadn’t studied their specific proposals in detail.

He is not alone in his cautious approach, at least in public.

“The specifics of potential solutions...as far as they have to be discussed with the (Bush) administration, I would like to do it there, and not in public,” Chrysler Chief Executive Dieter Zetsche told Reuters.

GM Chief Executive Rick Wagoner said any specific proposal affecting health care quickly gets caught up in a partisan debate over whether the U.S. should have a national health-care system.

“Lesson learned,” Wagoner said on Tuesday about past efforts to engage Washington. Speaking to reporters at a GM dinner, he said, “We have to think about what can be actively pursued.”

One dissenting voice came from Honda Motor Co., which after 25 years of manufacturing in the United States has fewer than 100,000 workers, retirees and their dependents to support under its health-care plans. By contrast, GM’s health plans cover about 1.1 million people.

“I don’t think the government has to do anything,” Honda’s North American sales chief Tom Elliot told the summit. “In general, I’d say we’d prefer to minimize government regulation in many areas, but we’re not in the situation the Big Three are in.”

A GROWING BURDEN

At the current growth rate, the health-care burden for the three U.S. automakers will double to about $20 billion by 2010, Robert Libertore, DaimlerChrysler AG’s head of governmental and public relations, said earlier this month.

“The (U.S.) automotive industry is having a particularly rough go of it because of the age of their employees, the internationally competitive market that they face, and the price-sensitive nature of their product,” said Mark Finucane, the lead consultant with Ernst & Young’s health sciences advisory group.

The United Auto Workers union has agreed to higher prescription drug co-payments, but for the most part the auto industry is unable to pass the bulk of higher health-care costs to its unionized work force.

Instead, the industry is using its size to push for insurers, hospitals and other providers to cut costs and increase the quality of care. In Ohio, General Motors and Ford have joined other businesses in pressing for legislation that would require hospital prices and quality-of-care data to be posted on the Internet.

But the health-care industry is resisting, Zetsche said. While automakers regularly negotiate with parts suppliers for cost cuts, some health-care providers refuse to talk about more cost-efficient procedures, Zetsche said.

“We have to make progress in the mind-set (of health providers),” he said. “In some cases they don’t want to even discuss it.”

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